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Federal regulators said they would drop civil charges against two former J.P. Morgan Chase & Co. traders at the center of the 2012 "London Whale" saga, ending the last U.S. case against traders involved in a debacle that cost the New York bank more than $6 billion.

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The decision by the Securities and Exchange Commission, disclosed in a court filing Friday, follows a similar move in July by U.S. prosecutors to drop criminal charges against the same ex-employees, Javier Martin-Artajo and Julien Grout.

The former traders were accused of hiding the losses as they mounted inside a London outpost of J.P. Morgan. The government cases relied on a key witness, Bruno Iksil, who worked alongside Mr. Martin-Artajo and Mr. Grout. Mr. Iksil, nicknamed the "London Whale" for his outsize bets, agreed in 2013 to testify against his former co-workers for their then-alleged roles in hiding the losses.

The one-paragraph filing Friday from the SEC doesn't disclose the reason for the dismissal. But people familiar with the case said the move reflected concerns about Mr. Iksil, who in recent public statements and deposition testimony stated the defendants hadn't engaged in mismarking and had acted with assent from senior management. That potentially contradicted the government's theory of the case, these people said.

The criminal case collapsed in July for similar reasons. On July 21, prosecutors in the Manhattan U.S. attorney's office said the government "no longer believes that it can rely on the testimony of Iksil in prosecuting this case" after a "review of recent writings and statements made by Iksil."

Lawyers for Messrs. Martin-Artajo and Grout welcomed the decision to drop the civil and criminal cases. "At the end of the day there was no evidence against him that justified the charges," said Edward Little, a lawyer for Mr. Grout. Bill Leone, a lawyer for Mr. Martin-Artajo, said his client was "grateful," adding: "This was not an unfair or an unjust result."

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The U.S. Attorney's Office also cited extradition challenges in its decision to drop the criminal charges: Mr. Martin-Artajo is a Spanish citizen, Mr. Grout is a French citizen, and neither appeared in the U.S. to face the charges.

Because of the extradition issue, the SEC was allowed to move forward with civil proceedings before the criminal case against Messrs. Martin-Artajo and Grout was resolved-an unusual sequence of events that allowed for extensive discovery in the civil matter, including depositions of witnesses. U.S. prosecutors asked the court overseeing the SEC case in 2015 to take "any available measures to prevent the defendants from using the civil discovery process to circumvent the criminal process while they remain fugitives from justice in the criminal case."

It was during discovery that Mr. Iksil's changing account emerged. In a February hearing in the SEC matter, Mr. Little told the court that they had learned of a 400-page memoir by Mr. Iksil that appeared to contradict the government's case. Mr. Iksil had also published some of his claims online.

"If I had to point to one thing that helped us prove our client's innocence, it was our ability to gather information in the civil case," Mr. Leone said. The lawyers presented the information gathered in the process to civil and criminal authorities, he said. "The amount of discovery that was permitted by this case was very unusual, and it was much appreciated."